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On Seeking Consensus on the Internalized Costs of Solar Thermal Energy

DATA: Internalized cost of solar thermal water heating: $15/GJ. This is for a capital cost of $40/gal (e.g. $3200 for an 80 gallon system) replacing a standard electric water heater costing $10/gal, and a solar fraction of 70% (fairly sunny location). 

April 24, 2015    View Comment    

On No Fuel Costs: The Sexy Seduction of Renewables

My point was simply that "no fuel costs" is certainly not what drives investment in wind/solar - favourable policy is. 

About the unsubsidized costs, you should scan through the data presented in the Seeking Consensus series I'm writing for TEC. Perhaps you can make some contributions. 

On the topic of developing nations, what you are actually referring to is China. In 2014, China was responsible for about two thirds of the clean energy investment of the entire developing world. Why can/must they do this? Because of coal. The Chinese economic miracle that lifted hundreds of milions out of poverty in record time (and facilitates heavy investment in more expensive clean energy) could not have happened on anything other than coal (take a look at the last graph in this article for some perspective). On the flipside, Eastern China burns half the world's coal on about 3% of the world's surface area. Obviously this will have negative effects that China's increasingly affluent population is very concerned about.

China has to invest in clean energy to maintain social order and can do so because of coal. Thus far hydro has carried by far the most weight in this regard (again 6 times as much growth as wind and solar combined in 2014), but we will see what happens when hydro maxes out. In the meantime, there are many poorer nations that would like nothing more than to follow the coal-fired economic miracle of China. 

April 17, 2015    View Comment    

On No Fuel Costs: The Sexy Seduction of Renewables

Firstly, the thing that drives investment in renewables is guaranteed profits secured through favourable policy. Many examples exist where investment in renewable energy has plummeted after the policy environment changed. For example, the most economic modern renewable, onshore wind, located in the most suitable country in the world, the US, experienced a 93% drop after the PTC expired as recently as 2013. 

Secondly, fuel costs represent a small fraction of the cost of electricity that comes out of your wall socket. All energy investors know this and when their own real money is at stake, they will do real calculations instead of repeating "no fuel costs" over and over. 

The most important barrier for "no fuel cost" intermittent renewables in the open market is that the value of the electricity produced by an installed facility will rapidly decline as more capacity is installed. An example for Germany is shown in a previous article. As an investor, I would certainly not invest in such a technology that will give steadily declining revenues over its operational lifetime unless the governments gives me a fixed guaranteed income. 

A more informative angle for the type of readership on TEC might be the attractiveness of technologies like wind/solar (and also nuclear) in an environment with steadily declining (now going negative) interest rates. Technologies with a cost structure heavily weighted towards CAPEX become more attractive in such an environment of stagnating/declining economic growth, whereas technologies with costs weighted towards OPEX (e.g. fuel costs) become more attractive in rapidly growing regions (i.e. the developing world that will emit triple the CO2 of the developed world as little as two decades from now). 

April 17, 2015    View Comment    

On Why Ecomodernists Should Embrace Wind Power

I'm always quite wary of these heavily technology driven approaches to addressing the 21st century sustainability crisis. In my opinion, our best route is a gradual mindset shift (facilitated by the amazing global communication power granted by the internet) where people gradually realize that more happy life years can be gained from less consumption. When looking at energy, this mindset will make everything easier by requiring less energy and also increasing the willingness to pay for more expensive clean energy. 

Even though this mindset shift is happening slowly at present, it certainly is happening. More and more people are realizing that their lives can be healthier, happier, more productive and less cluttered as they intelligently reduce material consumption. The obvious competitive advantage that this philosophy of more production and less consumption brings is also very attractive in the marketplace. 

Naturally, this mindset shift is starting in the developed world. To some degree it is being forced upon people by the dynamics of the global economy (e.g. median US household income is back to levels last seen in 1995 and the gradual emergence of negative benchmark interest rates around the developed world is a clear indication that the future will actually be smaller than the present), but more and more people are starting to consciously and proactively make this transition. 

Meanwhile, developing nations should be allowed to industrialize in the fastest possible way (e.g. the China coal model) in order to limit population growth and rapidly increase the level of awareness of the population. By the time they reach sufficiently developed levels, the example pathway to happiness and longevity set by the developed world should be much more evolved than today's consumerist paradigm.

Technology will undoubtedly play a major role, but I think the gradual evolution of global societal mindset (and the resulting reduction in per capita material consumption) will be more important. 

April 17, 2015    View Comment    

On Seeking Consensus on the Internalized Costs of Energy Conservation

DATA: Cost of energy conservation in transport: -$6/gallon. This is taken to be the smallest number in the example in the article. 

March 31, 2015    View Comment    

On Seeking Consensus on the Internalized Costs of Energy Conservation

DATA: LCOE of energy conservation: -$300/MWh. Although this is very hard to estimate with any degree of accuracy, it could be somewhere below half of the savings associated with downsizing the house as in the example in the article.

DATA: This assumption can also be extended to heat. When -$300/MWh is converted to costs per unit of primary energy by assuming a multiplication factor of 2 between electricity and heat, the cost amounts to -$42/GJ. 

 

March 31, 2015    View Comment    

On Seeking Consensus on the Internalized Costs of Energy Efficiency

DATA: Levelized cost of efficient transport: $1.31/gal according to the example in the transport section of the article for a 10 year car ownership period.

March 23, 2015    View Comment    

On Seeking Consensus on the Internalized Costs of Energy Efficiency

DATA: Levelized cost of efficient heating: $6/GJ according to the example in the heating section of the article. 

March 23, 2015    View Comment    

On Seeking Consensus on the Internalized Costs of Energy Efficiency

DATA: LCOE of efficiency: $36/MWh according to the example in the electricity section of the article. 

March 23, 2015    View Comment    

On The Decoupling of Energy, Carbon, and GDP in the United States

Some time ago, I plotted the fraction of the US economy comprised of manufacturing against energy intensity to find an almost perfect correlation (see below). It therefore appears as if the outsourcing of energy intensive labour to developing nations (and buying back the goods with dollars created out of thin air) is the primary cause of US energy intensity reductions. 

 

Other worrying decoupling trends are shown below in terms of life expectancy and happiness. As far as I can see, GDP growth is pretty useless if it does not translate to increases in the number of happy life years enjoyed by the population (especially in developed nations). 

 

March 21, 2015    View Comment    

On Rethink the Grid: Personal Power Stations

For the other side of this story, I wrote two articles earlier on the potential for distributed generation and distributed storage & demand response. Here are the main conclusions:

"In comparison to the utility scale alternative, distributed generation (primarily solar PV) has a fairly low potential and, in the vast majority of cases, will be unnecessarily expensive and complex.

This does not mean that distributed generation will not be deployed. Niche markets exist and the ideological attractiveness of this energy option remains very high and extremely marketable. What it does mean, however, is that distributed generation will most probably not make more than a minor contribution to the clean energy revolution that will have to take place this century. Headlines claiming that distributed solar will soon overthrow utilities everywhere should be patiently ignored until reality sinks in. As an example, the highly optimistic hi-Ren scenario in the PV Technology Roadmap from the IEA which has received broad PV-positive press lately forecasts about 8% of electricity from distributed PV by 2050. The vast majority of the remaining 92% will remain utility scale. It should also be mentioned that electricity accounts for only about 40% of primary energy consumption. 

The final conclusion from these two articles is twofold: 1) distributed generation is affordable, but far from economic and 2) distributed generation can contribute, but only to a minor degree. For these reasons, the ideological attractiveness of distributed generation presents a particularly difficult problem: we simply cannot afford to aggressively pursue uneconomic solutions with very limited potential when it comes to the energy and climate issues we face today. The time has come to leave ideology at the door and get pragmatic about the challenge before us."

March 21, 2015    View Comment    

On China's Coal Use and Estimated CO2 Emissions Fell in 2014

It is great that Chinese CO2 emissions declined, but, as with most of these kinds of articles, it is important to point out that wind and solar played only a small part. In terms of electricity generated, the 2013-2014 increase from wind & solar combined is about 6 times smaller than that of hydro (estimated from this Chinese source). 2014 was a great year for Chinese hydro, but hydro is now nearing saturation (~20% of total generation). 

March 2, 2015    View Comment